Business Mileage

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If you drive for your business, it is important to track your business mileage so that you can take a mileage deduction at the end of the year. Keep reading to learn all about business mileage and the mileage deduction.

There are two methods available for the mileage deduction: the actual method and the standard method.

The Standard Method

The standard method allows you to deduct a certain amount per business mile driven. You will track the business miles driven for the year (but not the actual auto expenses). And at the end of the year, your tax professional will multiply the business miles driven by the standard mileage rate ($0.67 in 2024) to determine the mileage deduction. 

The standard method is the most commonly used method and is a lot easier to track. Your tax professional will be able to advise you on which method is best for you and your business. 

The standard mileage rate includes gas, oil changes, auto tag renewals, insurance, and other maintenance items in the rate. If you are using the standard mileage rate, you will not pay for these items with your business card or track them on your Profit & Loss. These would be considered personal expenses if you are using the standard mileage deduction. 

Adding these items to your business books and also using the standard mileage deduction would be considered double counting these expenses and is not allowed by the IRS.

Parking and tolls are not included in the standard mileage rate. If you pay parking and toll fees that are related to business miles, you can pay for those with your business cards and add them to your Profit & Loss. 

The Actual Method

The actual method allows you to deduct the business use percentage of actual auto expenses. So, you would track both the business miles driven and all auto expenses for the year. At the end of the year, your tax professional will determine the percentage of auto expenses that are deductible by looking at the business use percentage of the vehicle. 

Automobile expenses such as gas, car insurance, oil changes, car registration etc. will be paid for with your business accounts and booked to an Automobile Expense account on your Profit & Loss. 

The actual method is a less commonly used method and is more complex than the standard method. Your tax professional will be able to advise you on which method is best for you and your business. 

How do I track business mileage?

Both methods require tracking business miles. You'll want to make note of where you traveled for business and the miles between your destination and your starting point. Your starting point would generally be your office or your home. 

You can use an app, like MileIQ, or a spreadsheet to track business miles. 

My program for business owners DIYing their books, Clear Profits, includes a Mileage Tracker spreadsheet as part of the digital product bundle. 

What counts as business miles?

Anything business related, for example:

• Business meetings
• Networking events
• Shopping for office supplies or inventory
• Trips to the post office

What doesn't count as business miles?

Commuting does not count as business miles. So, going from your home to your regular place of work. 

If you rent an office or work for one client and make the same trip daily, that is not counted as business miles. Traveling between clients or to different clients does count as business miles.

For example, let’s say you have a spray tanning business. You have a shop downtown where clients come to get spray tans and you occasionally make house calls to spray tan at your clients houses. The trip to a client’s house for a spray tan would count as business mileage. But the trip from your house to your shop to conduct day-to-day business would not count as business mileage. 

Business mileage is a pretty straight forward topic and if you have a tax preparer or bookkeeper to help guide you, it will be even easier! First thing you want to make sure to do is keep track of when & where you drive for business throughout the year. 

If you don't have a bookkeeper and are DIYing your books, check out my program, Clear Profits. Clear Profits is a DIY bookkeeping course + digital product bundle for the business owner who isn't ready to hire a bookkeeper yet. You'll also be able to download the Mileage Tracker once inside the program. Apply today!